Parent payout: Google settles in-app purchase suit for $19M

Apple and Amazon have also tangled with the FTC over in-app purchases.
CNET

The Federal Trade Commission on Thursday said Google has agreed to pay $19 million to consumers to settle a case about children -- unbeknownst to their parents -- making purchases within programs on Google's mobile app store.

The commission alleged that Google unfairly billed account holders on its Google Play market by not getting authorization from parents when kids bought things from apps on devices running Google's Android, the most popular mobile operating system in the world.

Many games offer the purchase of virtual items -- paid for with real money -- as ways for players to advance their progress during gameplay. The FTC said that buys on Google's marketplace can range from 99 cents to $200. The commission said the search giant agreed to tweak its billing practices to make sure it gets "express, informed consent" from account holders before someone can make a purchase.

"As more Americans embrace mobile technology, it's vital to remind companies that time-tested consumer protections still apply," said FTC Chairwoman Edith Ramirez, in a statement, "including that consumers should not be charged for purchases they did not authorize."

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The company said all Android customers who have made in-app charges will hear from Google about how they can get refunds, according to The Washington Post.

Google's settlement is just the latest example of the FTC cracking down on tech giants over their billing practices concerning apps. In January, the commission said Apple had to pay at least $32.5 million for a similar suit concerning in-app purchases. And in July, Amazon said it would fight an FTC lawsuit demanding policy changes and fines related to children spending money through apps on mobile devices.

The FTC's complaint against Google says that when the company initially introduced in-app purchases in 2011, buyers did not have to input their passwords. When the company implemented the requirement the following year, Google did not tell users that entering a password triggered the opening of a 30-minute window where the password would not need to be entered again when making a purchase.

Since then, Google has added more password protection options, letting users control how often they need to input a password: every time they make a purchase, every 30 minutes, or never.

"We've already made product changes to ensure people have the best Google Play experience possible," a company spokesperson said. "We're glad to put this matter behind us so we can focus on creating more ways for people to enjoy all the entertainment they love."

The issue over app purchases has even prompted some jostling among the top tech companies. After Apple found itself in the FTC's crosshairs in January, the company's General Counsel Bruce Sewell reportedly tipped the commission to Google's alleged transgressions as well.

"I thought this article might be of some interest, particularly if you have not already seen it," Sewell reportedly wrote to Ramirez and Democratic Commissioner Julie Brill in an email. In the note, Sewell pointed to a Consumer Reports article that called out Google for billing methods. The loophole enabled a kid to "spend money like a drunken sailor," the article said.

Tech companies have also been tangling with regulators in Europe over consumer protection concerning apps. In July, Google said it would comply with the European Commission's requests by piloting changes to its app store there, not using the word when referring to games that contain in-app purchases.